predictions

predictions

Three (Industry-Relevant) Marketing Trends for 2017

Posted by Mike McLaughlin on Jan 15, 2017, in Thoughts , tagged with , , ,

Predictions are an interest of mine and of course this time of year there are predictions everywhere about everything. Over the past few weeks I’ve digested more articles about marketing trends than I care to admit. The writing tends to be aggressive and the ideas are all over the place, ranging from better content to Snapchat to optimizing Web sites for Echo and Home voice-triggered searches.

Of course articles tailored to asset management are hard to come by. So after digesting all of these predictions, I thought to highlight the most common ones with potential (or ongoing) relevance to our industry. I ended up with three, so let’s count them down:

3. Mobile

Mobile remains important for well-known reasons, namely the continued growth of mobile Web traffic and search providers’ prioritization of mobile-friendly sites and results.

So what’s relevant for asset managers? Firms know the value of a responsive Web site. However, client-facing mobile apps have largely been a difficult obstacle. You can certainly count me as a skeptic as far as the opportunity to engage advisors and institutions via apps, especially when those apps typically do little but repackage information already available on the site.

But successful apps (outside the industry) deliver a better user experience and attract stickier usage than good Web sites. In addition, Google now offers app indexing. While I don’t think we’ll see any significant progress with client-facing apps in the near future, I do expect that they’ll remain a periodic topic of conversation with firms hoping to figure out a way to deploy them effectively.

2. Native Advertising

Ad blocking, increased competition on social media platforms and other factors are making it more challenging for traditional ads to get through and attract attention. Already a major factor with diverse execution methods, some project native advertising will make up nearly three-quarters of US ad revenue within five years.

So what’s relevant for asset managers? Developing compelling content and messaging has been an industry focal point for a while now. Marketing teams now find themselves at a point where creativity in promotion and placement is at least as important as creating the content / message itself.

Adoption of native advertising has been gradual within asset management. Given the intensity of the competition today, it seems that now is the time for it to accelerate.

1. Video

Ah, a topic that we’ve been talking about since the day Naissance began. The continued importance of video was a mainstay of almost every predictions piece I read. More content, more ads, more live streaming… all supported by an army of statistics on why video is so effective.

So what’s interesting for asset managers? I am actually a little stumped. On the one hand, video came up in no fewer than 5 client meetings last month. It’s on a lot of firms’ radars.

On the other hand I’ve already gone on record with why I think video isn’t done all that well across the industry. And if you exclude entertainment there’s still solid evidence that people prefer reading to watching.

Video ads certainly are an opportunity. But unless we see firms venture down the live streaming path or get creative in terms of presentation and format, this is one trend where I expect less interesting progress.

How Good is T. Rowe Price’s Forecast?

Posted by Mike McLaughlin on Jan 15, 2016, in Thoughts , tagged with ,

T. Rowe Price recently announced a significant expansion of its advisor-focused Sales efforts. Per Ignites (subscription), the firm plans to:

  • Double the size of the 32-person broker-dealer Sales force
  • Add 4 internals to the RIA team in order to create a 1:1 external-to-internal ratio

These announcements always make a splash in the industry. People are interested in questions about the potential success of the effort – does a firm like T. Rowe Price have enough brand equity with advisors to warrant such an investment? does a 1:1 ratio make sense for RIA teams?

But the part that interests me most is the proposed timeframe of the build-out, which T. Rowe Price pegs as 2-3 years. Why? Because the time horizon:

  • is not so short as to make the plan a sure thing, as firms can generally accomplish short-term initiatives with relatively high probability
  • is not so long as to make the projection somewhat meaningless, as the specifics of a 10-year plan within a given firm tend to boil down to pure speculation

Three years is short enough for a firm to make a reasonable projection, and long enough where many things can change and impact the outcome. This makes the significant and public nature of T. Rowe Price’s plan interesting. Consider some of the things that could materially impact the expansion plan over 3 years:

  • a bull or bear market
  • strong or weak relative product performance
  • shifts in advisors’ and investors’ product preferences toward or away from T. Rowe Price’s offerings
  • management team stability or turnover
  • operationalizing and managing a much bigger Sales team

I’d imagine T. Rowe Price has modeled the various scenarios and is committed to the plan. But I also think that the non-controllable (and even some of the controllable) variables are potentially-impactful. So, over the course of the proposed timeframe there is at least a decent chance that the firm will markedly deviate from the plan as it is defined today.

It will be interesting to see, 2-3 years down the road, just how good T. Rowe Price’s forecasting proves to be.

How Helpful is Grantham’s Bubble Prediction?

Posted by Mike McLaughlin on Nov 22, 2013, in Thoughts , tagged with , ,

I spent some time today with GMO’s third-quarter letter (PDF) to investors, specifically the already-much-discussed thoughts from Jeremy Grantham. Mr. Grantham touches on a number of topics, but the part that piques my interest is his take on the pending stock market bubble:

…so I would think that we are probably in the slow build-up to something interesting – a badly overpriced market and bubble conditions. My personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year or, more likely, two years, with the rest of the world including emerging market equities covering even more ground in at least a partial catch-up. And then we will have the third in the series of serious market busts since 1999…

This take made me think about a recent Slate blog post regarding the value of bubble-related predictions. If you don’t want to click through, here’s the important take from Matthew Yglesias:

I think it’s important to recognize how fundamentally unimpressive it is to call a financial crash years in advance. If I predict to you today that the stock market is going to crash soon and people are going to lose a lot of money, and then people keep making money for the next 40 months and then the stock market crashes, that would hardly make me a genius financial forecaster.

I find that point of view extremely valid. Investment managers consistently throw out “strong” predictions, but too often those predictions are couched in an unspecific timeframe. There isn’t much value in that.

In Mr. Grantham’s case, his prediction is on a middle ground. The 20-30% appreciation is specific; the timeframe less so; and there’s no commentary on how the variables should be balanced (e.g., what if the 30% appreciation happens over the next 7 months?).

As one advisor said to me, “At some point he will be right. But there’s nothing here for me to act on.”